Plantation A Legal Thriller
Page 37
Chapter 37
Amongst the pile of letters and reports were some legal documents. An arbitration had been started by a Soviet insurer against Plantation. (Arbitrations are used to sort out disputes privately, using a procedure similar to a court.)
Several months earlier, a letter of demand had landed on Jim Ashby’s desk from the solicitors for a London-registered company, Caspian Limited. Their office was in Rood Lane, not far from Plantation.
At that stage, Jim Ashby didn’t know anything about Caspian or that it was owned by the Finance Ministry of the Union of Soviet Socialist Republics – the USSR.
Improbable as it may sound that communists would run a business for profit like the bourgeois they despised, that is precisely what they did.
After the Russian Revolution in 1917, the Bolsheviks discovered that without insurance, no-one would trade with them. And without trade, the USSR and the Revolution would be bankrupted.
Although a Soviet state insurer was created, it too would have been bankrupt without reinsurance. In consequence, the Bolsheviks decided that rather than use Western reinsurers, they would set up their own insurer and reinsurer in London and earn hard currency at the same time. (Outside the Soviet Union, roubles were worthless.)
Around Lime Street in the 1930s, it was considered amusing that even communism could not survive without the evils of insurance.
Almost fifty years later, in the early eighties, Caspian’s office was manned by two Russians. Both of them enjoyed living in the West. Moscow ignored them as long as there were millions of US dollars flowing into its bank account and it could buy all the things the revolution couldn’t produce (which was nearly everything).
Occasionally, Caspian reinsured other insurers. And each year, a few insurers reinsured them. For each of these contracts, the brokers would organise a wild evening with the best vodka and endless toasts at an expensive restaurant in Mayfair, followed by a tour of West End clubs and ladies of the night.
In addition to Caspian, the Soviets ran a second company in London.
Sovyet Export traded from an office in the East End, selling large consignments of caviar, vodka and oil to buyers in the West.
It also handled other business. Unlike Caspian which was a genuine insurer, Sovyet Export was a front for intelligence-gathering. Soviet State Security used it to run a network of informants in the countries where Sovyet Export did business. Its agents monitored Western military movements and ran a string of political insiders sympathetic to the Soviet cause.
All of the consignments sold by Sovyet Export were insured by Caspian. No-one in the West would buy anything from the Russians unless there was insurance to cover safe delivery of the full consignment in the condition as ordered : such was the shoddy quality of goods produced in the communist bloc.
Anyone going to the Soviet Union from the West would discover within half an hour of their arrival that there was a black market for anything which couldn’t be bought in the state-run stores.
As there were always shortages of everything in the shops, a percentage of goods from the best Soviet factories always found its way onto the black market at inflated prices. Theft, fraud and corruption were so endemic that goods and produce exported from the Soviet Union were always ‘taxed’ in this way.
When goods were despatched from a Soviet factory, they went unchecked until their arrival at the buyer’s warehouse in the West. When they were unpacked, every consignment was always short of the total order. As the buyers could never track down anyone in Sovyet Export (who were never around), the buyers deducted the missing percentage from their payment or gave themselves a credit on the invoice. This became common practice for companies trading with the Russians. And every account rendered over a long period was either inaccurate or wrong. No-one in Sovyet Export bothered about it and the buyers went on making their deductions in the normal way. In the interim, an ocean of red ink was building up and up and up.
At the start of the eighties, a new General Secretary of the Communist Party was elected in Moscow. A campaign was launched against drunkenness and corruption to enforce puritanical zeal in every department. Managers were sacked or sent off to labour camps and ultimatums given to those who replaced them.
One day, when the operatives in Sovyet Export were testing a listening device near the American Embassy in Grosvenor Square, an auditor in Moscow uncovered the discrepancies in the accounts ; even State Security at the Lubyanka did not escape a carpeting.
Ultimately, this filtered through to London and a team of grim-faced bean-counters from Moscow arrived unannounced to start going through Export’s books. At the end of a month, they found an enormous amount had been withheld by its customers in the West. When demands for payment were sent out, all of the buyers complained that every single consignment they’d received during the year was short of the contract amount and that there was fraud and criminality involved.
By this time, the Kremlin was apoplectic and demanded that Sovyet Export recover every single penny of the unpaid accounts within two months or heads would roll. At the same time, the Lubyanka wanted urgent data on the latest missile tests the Americans were carrying out. Faced with these conflicting pressures and the possibility that the London Metropolitan Police would begin asking questions, Export’s directors took the easiest course possible : rather than argue the toss with every single buyer on their books, they decided to claim the unpaid balances on all of the invoices on Export’s insurance with Caspian – obviously the missing goods had been ‘lost in transit’. Anyone could have lifted them at any point in the journey, from the moment they left the factory in Russia until the time they arrived at the buyers’ warehouse. What other possible explanation was there, comrade ?
This was a politically astute move – like everyone in Russia, it was well known who the real thieves were but no-one was powerful enough to take them on. For one thing, the black market gangs were run by the militsia – the civil police – and the secret police from the Lubyanka. Even Sovyet Export’s controllers were probably getting rake-offs.
When informed of the claim on their policy by their State Security colleagues, Caspian’s underwriters were petrified that their capital reserves would be wiped out or that they would be ordered back to Moscow and sent to labour camps in the Arctic Circle.
Happily however, when they checked their records, they found that Caspian had insured Sovyet Export for half a percent of the total value of any goods ‘lost in transit’. The rest was reinsured by Stirling.
With their objective being to pass the parcel, they quickly paid Caspian’s miniscule share while notifying Plantation that its part of the claim totalled eighty five million pounds.
That evening, over a bottle of vodka each at a bar in Belgravia, they thanked their stars that Stirling had saved them from a trip back to Moscow and perhaps somewhere far beyond, to the Arctic north – for the moment anyway.